The need for ‘smart data’
The gathering of raw or ‘big data’ on its own is not enough. What market participants now benefit from is ‘smart data’. This is data that has been normalised – i.e. standardised – and presented in a unified format. It’s a logical step that consistent transaction messaging language leads to more streamlined operations.
Artificial Intelligence (AI) can quickly identify erroneous or incomplete data and transform only the clean and enriched inputs into smart data that can be used across any part of an institution’s trading operations.
To add further capabilities, advancements in machine learning enables the ability to spot ‘normal’ activities in data sets as well as ‘abnormal’ behaviour; this not only provides a deeper understanding of any particular market, but can also guide traders to potential opportunities and action.
Commentators may refer to ‘data as the new oil’, but we should remember that cars and airplanes don’t run on crude oil, but on fuels derived from oil through a sophisticated, multi-stage refinement procedure. It is the enrichment process that turns ‘big data’ into ‘smart data’.
Institutions aiming to create their own data transformation platform that can operate across all counterparty transactions may find that it is unfeasible to harmonise different protocols and too costly to produce their own in-house solution.
In an industry where time to market is imperative, the ability to license an already-available secure platform is a prudent option. Neutrality of a third-party supplier will engender trust in the data, can stimulate trading on the platform and link multi-asset participants to one source of liquidity. This will also allow for transparent benchmarking of prices and comparison of market share.
Progress in FX not only requires a platform that can handle the huge volume of complex trades, but one that is as intuitive as a quant providing analysis and context 24/7. The disparate nature of multi-party protocols has traditionally been an overwhelming challenge for many participants to overcome